eBay India By Sam Kligman & Chester Hiu

Background:

eBay India’s mission is to provide a global trading platform “where practically anyone can trade practically anything”. It does this by providing a user-friendly platform to facilitate transactions. In general though, eBay is a great platform for small retail sellers, who would otherwise not be able to reach a larger consumer market due to restraints such as location and costs associated with renting a brick and mortar location.

eBay India is a relatively new entrant into the eastern market. On top of that, it is widely known that the amount of credit card penetration in India is near 5%. This means that most Indians are accustomed to purchasing goods with cash. Furthermore, the bazaar style of purchasing, where the buyer can interact directly with a product, has historically been the most common method. Although the credit card penetration is quite low in India, eBay India still manages over 4 million registered users across all states and territories The average buyer income profile is of grade A or A+ standing. Moreover, the majority of the items listed on eBay India are fixed-price. By putting in place activities like this as well as facilitating customer purchases through PaisaPay eBay India has been mitigating the low use of credit and gaining customer trust.

In terms of competition, eBay had to face many smaller rivals upon entry into India, but none of these smaller competitors were established enough to prove much of a threat. Its largest competitor in the US, Amazon, has also recently broken some ground in India. Given all these facts, we went into eBay with many questions that we will cover next in the initial impressions section.

Meeting:

When we arrived at eBay, we were met by Shivani Suri Dhanda, the head of eBay India’s Brand and Acquisition Marketing, Ratul Ghosh, the head of Strategy. They gave us a brief overview of the company as it currently stands, similar to the background that we have provided above. We prepared several questions before the meeting, including, but not limited to: 1. With such low credit available online, how would they be able to continue to grow?, 2. How were they able to overcome the Indian bazaar style of purchasing goods?,  3. Where did they see themselves and their competitors going in the near future?

 

Their responses were interesting to say the least. The first was that they only acted as an intermediary between users, which were typically b2c (small businesses to customers), so growth was only a function of how much people wanted to sell online. Since, they mitigated any sense of potential risk by providing their standard 100% guarantee, many people did want to sell online so this was not a problem.  They also mentioned that with the trust they were developing they saw large potential for growth; viewing the current market as a blue ocean. In response to the second, they said that the bazaar market would most likely be taken care of through the growth in mobile sales. Since it has already been growing significantly they thought this was a good bet to make. Finally, in response to the third they stated that their competitors are not as well organized and the ones that are somewhat organized with large user bases did not pose a threat since the projected market was huge. Any success of competitors only stood to legitimize their value proposition and convert transacting online into a more standard purchasing practice for consumers.

Impressions Coming In & Out:

Before going in we thought that eBay India might not be well situated for success. We were concerned about its model being able to surmount cultural and financial barriers. However, after our meeting we felt that eBay India is doing a great job taking the conservative route and are not overextending their capabilities. The people running eBay India have a good grasp of their potential and current markets and are happy to be working for eBay although many could have higher paying salaries in other lucrative tech businesses. What they do, they enjoy, and they also get a feeling that they are helping their fellow Indians. The rapid pace of development within the digital sales landscape makes every month of progress seem like 3 months of experience so they really are getting an overall enriching experience. The fact some have gone on to find their own entrepreneurial success only further validates our belief that they are on the right track. Overall, we commend them on their company culture of accepting people of all backgrounds, and truly believe they have set up a sustainable model for fostering Indian entrepreneurs from the ground up.  The best thing about their model is that everyone seemingly wins. Ultimately, eBay India has introduced a better Pareto equilibrium point to India.

Overall:

Overall, eBay India has shown us as MBA students that we have the potential to perform similarly. Furthermore it gives us confidence that we can be successful if we apply ourselves to any local market and understand its people and culture. The great challenge we face, much like eBay, is how to stay true to its mission while conforming to the local cultural, societal, and financial needs.

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